Gold-Pegged Digital Assets Rally Amid Soaring Precious Metal ETF Investments

Gold Surges as ETF Inflows Hit Multi-Year High, Driving Gold-Backed Crypto Gains

Gold continues its strong rally in 2025, rising nearly 11% year-to-date and 43% over the past 12 months, as investors flock to safe-haven assets amid economic and geopolitical uncertainty.

While spot Bitcoin ETFs faced a record $1 billion in daily outflows, gold ETFs are experiencing robust inflows, reinforcing the metal’s position as a hedge against volatility.

Gold ETFs See Largest Weekly Inflow in Nearly Three Years

Data from the World Gold Council shows that physically backed gold ETFs recorded their biggest weekly inflow since March 2022, adding 52.4 tons ($4.9 billion). Most of this demand stemmed from North American investors, reflecting growing institutional confidence in gold.

As a result, total gold ETF holdings have climbed to 3,326 tons, valued at roughly $314 billion.

Gold is currently trading at $2,910 per ounce, with analysts attributing its rise to escalating geopolitical tensions and uncertainty surrounding potential U.S. trade tariffs under a possible second Trump administration.

Gold-Backed Cryptos Ride the Wave

Gold-backed cryptocurrencies such as Paxos Gold (PAXG) and Tether Gold (XAUT), which are pegged to the price of physical gold, have outperformed the broader crypto market. While the CoinDesk 20 Index shows an overall 26% year-over-year increase, gold-linked tokens have seen even stronger demand.

According to RWA.xyz, over $25 million worth of commodity-backed tokens were minted this month, marking the highest issuance since December 2022, while $12 million worth were burned.

Tight Supply May Push Gold Even Higher

Despite rising demand, gold’s supply remains constrained. World Gold Council data shows that gold mining production dropped by two tons in Q4 2024, while recycling and hedging activity increased. In total, gold supply grew just 1% year-over-year, underscoring potential supply-side pressures that could support further price appreciation.

With rising institutional demand, limited supply, and a shifting macroeconomic landscape, gold’s strong performance appears set to continue, with gold-backed cryptocurrencies benefiting alongside it.